The irony could not be starker. The set of eight operators who were given licences in January 2008, albeit through controversial means, were supposed to emerge as white knights for the beleaguered telecom minister A Raja. Supposedly, the existing operators were acting as a cartel and charging the consumers high tariffs. Raja had taken on the entrenched lobby, broken the cartel, and as and when the set of new operators would begin their services, tariffs would come down substantially, benefiting consumers. In the process, all criticism that Raja had violated norms while allocating them licences would fade as the consumers started reaping the bounties of competition.
The twist in the tale is that with more than two years having passed, a majority of them have not yet launched services and a few who have rolled out services in a handful of circles function on the periphery. Faced with fund crunch, lack of a viable business model and a belated move prohibiting them till three years from fully cashing out; reportedly these players have now started making rounds of Sanchar Bhavan, seeking ways of honourable exit. This means they are ready to surrender their licence if the government refunds them the licence fee amount or some part of it, or allow them to sell off to others with government charging a slice of the gains being the ultimate owner of spectrum. In fact, the only treasured possession of these companies is the 4.4 Mhz spectrum, which came their way bundled with their licences.
The desperation of the operators can be understood as the Indian telecom market has undergone significant changes since the time they lobbied and managed to get the licences. However, a bigger scam would emerge in case the DoT indeed starts working on any such proposal.
Consider the following facts first: barring one (to a certain extent)?Sistema Shyam?the record of the other seven operators with regard to commercial launches of services is dismal and fails to meet the roll-out obligations enshrined in the clause 35.2 of the Universal Access Services Licence. The conditions require the licensee to cover at least 10% of the district headquarters in the first year of being given the licence and 50% by the end of third year. Later this was amended, stipulating that the conditions be met within the same time span after being allocated spectrum, which was a sensible move.
According to government?s admission in Parliament in January this year, barring Unitech Wireless (Uninor) and S Tel?the former has launched services in eight out of 22 circles while the latter has done so in three out of six circles?the record of all others is zero. This is when barring a few circles it has been nearly two years since spectrum was granted to all of them.
The licence conditions on roll out obligations are very clear: the government has the powers to impose a fine of Rs 5 lakh a week for the first 13 weeks of delay, Rs 10 lakh for the next 13 weeks and thereafter at the rate of Rs 20 lakh for delays up to 26 weeks. If any operator fails to fulfil the obligation even after 52 weeks of delay, then the government has the power to cancel the licence.
Still, so far, neither has the DoT levied a fine on any such operator nor is it in any mood to scrap their licences. As with every rule comes a way of bypassing them and so is the case with regard to roll out obligations. It does not mandate operators to launch services commercially, which means that subscribers can rightfully demand its connections. Therefore, operators put up patchy networks in district headquarters either by sharing tower with incumbent operators or by entering into intra-circle roaming pacts. Interestingly, Etisalat DB, which is one new licensee having the dubious record of not having commercial services in any of the 15 circles, claims that it has launched services in all the 15 circles and has a subscriber base of around 18,000! So the company can neither be fined nor its licences be scrapped, technically.
Still what explains the desperation of the operators and even of the DoT to bail them out is because the PMO has now started enquiring about the poor state of roll-out by these operators. On top of it, there is CVC enquiry into the entire licensing criteria. A bail-out explained in good economic language may hopefully put a lid on all this!
Last time Raja got through his way, but this time round the government should exercise vigil and ensure that no sweet bail-out is extended to these operators. The right course would be to scrap the licences of the non-performers and take back the spectrum allocated.
There?s a huge 2G spectrum crunch and incumbent operators adding substantial subscribers month-on-month need it for growth. The government should allocate spectrum to them. However, before doing so, it should first come out with a different criterion rather than the current subscriber-linked one (auction can be one). It would be wise if the government trashes Trai?s recommendation on the issue since it would neither help it nor the operators or consumers.
rishi.raj@expressindia.com